LIPA Releases Pace Study on Offshore Wind Project Costs
Uniondale, NY – August 23, 2007 – The Long Island Power Authority (LIPA)
today released a study prepared by Pace Global Energy Services evaluating the
economics of its proposed 140 megawatt (MW) Offshore Wind Park.
Pace estimates that the project’s cost could reach $811 million, which
includes the construction and financing costs, and the cost for the transmission
cable needed to bring the power produced by the wind turbines to a land-based
LIPA substation.
When compared with the cost of Long Island-based combined cycle natural
gas-fired generating plant, the Pace study concludes that the “levelized green
premium” for wind-generated power, when spread out over a 20-year period, would
come to about $66 million per year or about $2.50 per month for the typical
residential consumer who uses 775 kilowatt hours per month.
The “green premium” for wind power is calculated by taking the difference
between the cost of a megawatt hour (MWh) of electricity produced in a combined
cycle natural gas power plant on Long Island, which is about $137 per MWh, and
a MWh of power produced by the Offshore Wind Project, which could be $291. The
“green premium” of $153 per MWh when annualized and spread over a 20-year power
purchase agreement projects the “levelized green premium” to be about $66
million per year in 2010 dollars.
The Pace study, found that the costs for the proposed offshore wind project
are in line with market expectations for North American offshore projects given
the early stage development of such a market and the overall lack of a
well-defined national energy policy to support these kinds of projects. Costs
for developing offshore wind projects in Europe are considerably lower due to
the experience in building such projects there and the government incentives
offered for such alternative energy resources.
LIPA requested the study after FPL Energy had given the Authority an updated
cost estimate of $697 million, as of the end of 2006, to construct the 40 wind
turbines that would generate about 140 megawatts of renewable wind energy
for Long Island. FPLE’s cost estimate did not include the financing and
transmission cable costs.
“Obviously, there is a premium for building an offshore wind project when
compared to conventional energy projects,” said LIPA CEO/President Richard M.
Kessel. “Long Island must decide where it wants to go with its energy future.
Should we continue on as we have in the past by adding more and more fossil fuel
power plants or do we give a large-scale renewable energy project a chance to
help break the grip of oil and natural gas as the primary fuels used to keep our
lights on?”
LIPA’s Board of Trustees will discuss the proposed Offshore Wind Project and
possible alternatives at its September 25 meeting.
The Pace study can be downloaded from LIPA’s Web site: www.lipower.org. |
